Empirical Analysis of the Hungarian Insurance Market

Abstract

This paper focuses on the market structure of the Hungarian insurance market. After the change of regime, the monopoly situation of the Hungarian insurance market started to develop rapidly. The sector still has a strong oligopolistic character, so it worth examining how close the market is to a state of perfect competition. From the estimated elasticity of total revenues with respect to changes in input prices, we can deduce the market structure based on the methodology of Panzar and Rosse (1987). We estimate the input price elasticity with a static and a dynamic panel model. Our research shows that the structure of the Hungarian insurance market significantly differs from the perfect competition case between 2010 and 2019. The knowledge of the market structure is important for modelling phenomena and new regulations effectively in the sector, which is important for the supervision to be able to protect the costumers.